Promissory Fraud – Consider Using if You had a Predatory Lender?
Let’s not forget about promissory fraud. Homeowners were promised many things during the loan origination process that never materialized. Promissory fraud permits the recovery of punitive damages and allows for the avoidance of procedural bars such as Statute of Frauds and parol evidence rule. Promissory fraud can also give rise to criminal liability.
Other Types of Fraud:
1. FRAUD: A false statement wherein the speaker knows it is false, intends for it to be relied upon to the detriment of the receiver, who does reasonably rely on it to his/her financial detriment.
2. FRAUD IN THE EXECUTION: A trick where the signor believes he/she is signing something other than what the document says it is. Probably applicable in the mortgage mess because the truth is people did not know they were signing the equivalent of their own financial destruction whereas the parties presenting the document pretended it was a standard mortgage loan that had been properly subject to industry standard verification and underwriting standards.
3. FRAUD IN THE INDUCEMENT: A lie causing a person to execute a document, and otherwise meeting the definition of FRAUD as above. Examples “This is the fair market value of your new house,” or “Housing prices always go up, never down,” or “we’ll be able to refinance the property, give you more money out of it, all before the time for reset of the payments.”